Strategy increases Stride fundraising goal to $1B

Strategy announced the initial price for its Stride preferred stock, while expanding the intended offering from $250M to $1B. The new preferred shares will contribute to its general BTC purchases, though the funds will come from selected investors this time. 

Strategy (MSTR) announced new details of its Stride (STRD) preferred stock, a new tool for fundraising.

The STRD offering will be expanded from $250M to $1B, giving the company more leeway for BTC purchases and partially covering other operating costs. Initially, STRD was supposed to sell just 2.5M shares to a smaller circle of investors. This is Strategy’s biggest IPO upsize compared to previous share sales. 

STRD launches with a discount

The initial sale price of STRD will be $85, with the issuance and sale scheduled for June 10, depending on the completion of final closing conditions. STRD may see demand based on the previous performance of STRK and STRF, which rallied above their IPO prices. The performance may also hinge on the price of BTC and general market sentiment.                 

The offering will place 11,764,700 shares of 10.00% Series A Perpetual Stride preferred stock. The shares will have a liquidation preference price of $100, as previously stated. Initially, the STRD price was also expected to be $100, so the discount at the initial sale is considered a bid to increase funding. 

Strategy expects proceeds of $979.7M, excluding discounts and commissions for the underwriters. The proceeds will go toward new BTC acquisitions, as well as general corporate purposes, announced the company. 

The new STRD asset will offer a 10% dividend, which is not mandatory and depends on favorable market conditions. If declared, dividends will be paid out quarterly.

The new sale arrived after Strategy added a small weekly purchase, bringing its total treasury to 580,250 BTC.

Strategy bets on STRD to revive its stock growth

The proposed placement of $1B in new preferred shares far surpasses previous STRK and STRF placements. 

On the one hand, the ability to raise more funds would be good news for Strategy and its appeal to investors. However, there are ongoing doubts that Michael Saylor needs to get more creative with fundraising to continue his BTC purchasing strategy. 

If successful, the offering will give Strategy a leeway to acquire close to 10,000 BTC. The company has no fixed limit to buying BTC on a weekly basis, with purchases depending on demand for its other stock types. Usually, purchases were financed with a mix of MSTR common stock, as well as STRF and STRK. 

Following the pricing announcement, MSTR common stock traded at $386.60. STRF shares fell to exactly $100, from a recent peak at $107. STRK traded at $101.64. All three share types have sunk below their 2025 peaks as BTC also slid from its recent record at $112,000. 

The risk profile of STRD also makes the other assets look safer and more attractive. For some potential investors, STRD is the equivalent of a junk bond tranche. The discount price and potential passive income make STRD akin to a high-risk bond. The new IPO coming in a few days will measure institutional demand for Strategy’s BTC maximalism.

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